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AZERBAIJANI EXPORT PIPELINES GETTING MORE EXPENSIVE
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The news agency Turan
The news agency Turan

AZERBAIJANI EXPORT PIPELINES GETTING MORE EXPENSIVE

Yesterday Serbian parliament passed a law on the South Stream gas pipeline, which will accelerate providing of land for construction of the gas pipeline via this country. Construction of the gas pipeline through Serbia (with two branches in Croatia and Serbian Republic and in Bosnia and Herzegovina) is planned to begin in quarter 1, 2013. The gas pipeline will pass through the territory of over 14,000 physical and juridical persons.

 
105 million Euro has been already allocated for the pipeline construction this year. About 1.7 billion Euro (about $2.3 billion) will be invested into the project. The pipeline will be 450 km long and its annual carrying capacity will be 40 billion cub.m. The pipeline is planned to be put into operation in 2015.
 
The information attracted our attention, because construction of a new export gas pipeline will begin in Azerbaijan next year. The project will envisage expanding of the South Caucasian Pipeline (SCP) to export gas from the Shah-Deniz field.
 
The pipeline will begin to the south of the Sangachal terminal. Its length up to the Azerbaijani-Georgian border will be only 435 km. It will be built of 56 inch pipes and up to 32 billion cub.m. of gas a year could be pumped via it in the future. The Stage-2 of the Shah-Deniz project envisages transportation of 17 billion cub.m. of gas during the peak load period (16 billion cub.m. in normal regime + 1 billion cub.m. in a reserve regime).
 
Alasdair Cook, BP Vice President for Shah-Deniz project, told Turan at the end of January 2013 that expanding of the SCP is estimated at about $5 billion, including works in Georgia (construction of two compressor stations and auxiliary infrastructure). He specified that the estimate includes possibility of rising of construction expenses by 20%. BP company believes that the works will cost $4.1 billion. However, Turan has been told that works on the Azerbaijani section of the pipeline are estimated at $2.5 billion and on the territory of Georgia at $1.6 billion.
 
Therefore, construction of the pipeline in Azerbaijan should be much cheaper. At first, Serbia has a difficult relief, while in Azerbaijan it is a valley. Price for the land is much higher in Serbia, but in Azerbaijan land is rented during the construction works.
 
From 2004 to 2006 cost of the 680km-long SCP from the Sangachal terminal to the Georgian-Turkish border totaled $1.1 billion. Is annual carrying capacity was 7.5 billion cub.m. + 0.5 billion cub.m. of reserve. During that period Azerbaijan successfully used the construction tactics: it passed the bid to the company, which has completed construction of the Baku-Tbilisi-Ceyhan oil pipeline, and it has immediately started the gas pipeline construction (there were, naturally, discounts).
 
Considering all these estimates, it would be interesting to find out total cost of the entire export infrastructure of Azerbaijan, which will be used to export gas from the Shah-Deniz field to Europe? BP claims that total sum will not exceed $20 billion. This means that TANAP and European gas pipeline with total length between 2600 and 3100 km will cost $15 billion. The estimates of expansion of SCP and TANAP ($10 billion) actually coincide – 1 km of pipeline will cost $5.7 million and $5.6 million. There is no a significant difference in TAP. However, if Nabucco West gas pipeline is selected as the main export route, 1 km of the pipeline construction will cost $3.8 million.—0-
 

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